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Over a year ago, Congress passed the “Jump-Start Our Business Start-ups Act,” better known as the JOBS Act. Its supporters said the new law would create American jobs by making it easier for “start-ups” to raise money by issuing IPOs – initial public offerings of their shares.

Sounds like a win-win for business, investors and workers, right? But now that the new law has taken effect, it’s clear that companies looking to raise money from investors could use the JOBS Act to hide information from the investing public. And, as we’ve seen repeatedly over the past twenty years, the more information companies can hide, the greater harm that can befall investors.

Thanks to the JOBS Act, these new companies now can dispense with the pesky matter of making full disclosure about a company’s finances to investors.

As the New York Timesreported this month, the early experience with the JOBS Act shows that companies are awash in new cash, brokers are flush with IPO commission money, and investors (surprise, surprise!) are getting the shaft.

The JOBS Act allowed tech start-ups Zynga and Groupon to raise truckloads of investor cash based on what the Times called “aggressive accounting tactics.” It also allowed the New York grocery chain, Fairway, to raise enough IPO cash so that the company’s market cap is now $825 million. Each grocery store is now valued at an astounding $71 million!

And what’s even more insulting is that the Securities and Exchange Commission – that what we’re supposed to think of as the “People’s SEC” – plays a big role in this whole charade.

“Fairway is classified as an emerging growth company, and therefore arguably benefited from the relief offered by the JOBS Act,” wrote the Times’ Steven M. Davidoff. “The first thing is that the company was able to obtain confidential review of its IPO documents with the SEC.”

“Companies like this provision because their numbers are reviewed and revised by the SEC without the public’s knowing the agency’s focus,” Davidoff wrote. “But this also puts investors in the dark about possible problems.”

“Another significant advantage provided to Fairway by the JOBS Act was the ability to avoid for up to five years making extensive disclosures on its executive compensation or holding a ‘say on pay’ vote,” according to Davidoff. “Fairway also took advantage of the law to avoid disclosing the full compensation of its executives.”

The JOBS Act was sold to the American investing public as a way to promote growth, create jobs and help the economy shake off its long-term malaise.

But it turns out that start-ups can use the new law to hide information from investors. A lot of commentators – us included – predicted that he JOBS Act would provide Wall Street with yet another opportunity to pull an “inside job” on the American investing public, which is now even more susceptible to stock fraud. This is one case where we hate to be right.